CHAPTER 1

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27
THE ECONOMICS OF CRIME
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CHAPTER OUTLINE
Who Commits Crimes and Why
The Rational Criminal Model
The Costs of Crime
Optimal Spending on Crime Control
Summary
LEARNING OBJECTIVES
LO1: Describe how economics can contribute to the debate over crime and crime control.
LO2: Describe who generally commits crime and why.
LO3: Conclude that economists who study crime often assume that criminals are rational.
LO4: Analyze the cost of crime to society and whether we are currently spending the right amount, focusing on
the right criminals, emphasizing the right crimes, and enforcing the right sentences.
LO5: Apply the principles of incentives, marginal cost and marginal benefit to crime control.
DISCUSSION QUESTIONS
1. According to Gary Becker’s model of criminal behavior, what are the two main factors that determine crime?
2. What does Becker assume about the criminal? Why is this criticized?
3. What are the risks and return for a crime? What are the risks and return for a legal job?
4. What effect will a recession have on crime?
5. How will raising the level of education in the United States affect crime?
6. What are the two things that we can do to deter criminals from committing crimes?
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7. What are the costs associated with a crime?
8. Use the concepts of marginal benefit and marginal cost to determine how vigorously we should enforce the
law.
9. What is the marginal benefit to society from incarcerating a criminal?
10. What is the marginal benefit of continuing to incarcerate a criminal that commits 20 crimes per year at a cost
of $3,000 per crime? What is the marginal cost of incarceration? (Use the average cost of holding a criminal
in jail given in your text.) Estimate the net benefit to society from incarcerating this criminal.
11. What are the two methods economists use to estimate intangible losses associated with crime?
THE WEB-BASED QUESTION
Part I.
The Student Right to Know and Campus Security Act of 1990 was signed by President Bush in 1990. This
law is known today as the Cleary Act, in memory of Jeanne Ann Cleary. In 1986 she was robbed, beaten,
raped, and murdered by another student that she did not know while she was sleeping in her dorm room.
The Cleary Act now requires all colleges that participate in the student federal aid programs to report the
incidences of crime on campus to the Department of Education. The schools are required to disclose this
information to students, faculty, staff, and prospective students upon request. The summary statistics of oncampus crimes reported by post-secondary schools for the years 2001 through 2003 are reported in the table
below. What changes do you see in the on-campus crime statistics in the United States?
Your College Name:
T
t
Total U.S. On-Campus Crime
Reported to the
U.S. Department of Education
YEAR (3 recent years)
2005
2006
2007
Criminal Offenses—On Campus
Murder/Non-Negligent
11
9
46
2704
2710
2696
45
43
38
Robbery
2028
1960
1935
Aggravated Assault
2868
3006
2833
Manslaughter
Forcible Sex Offenses
Non-Forcible Sex Offenses
The Economics of Crime
Burglary
3
30819
32105
30204
Motor Vehicle Theft
5888
5512
4910
Arson
1019
933
790
2
0
4
Liquor Law Violations
34315
26185
35820
Drug Law Violations
26092
27966
28920
1956
2006
1760
178831
190048
186290
26092
27966
28920
1956
2006
1762
Negligent Manslaughter
Arrests – On Campus
On-Campus Arrests
Illegal Weapons
Possessions
Disciplinary Actions on Campus
Liquor Law Violations
Drug Law Violations
Illegal Weapons
Possessions
Source: The Office of Postsecondary Education, U.S. Department of Education. Summary
Campus Crime and Security Statistics 2002-2004
http://www2.ed.gov/admins/lead/safety/campus.html
http://ope.ed.gov/security/
The crime statistics for your school are available on the following website of the Office of Postsecondary
Education, U.S. Department of Education: http://ope.ed.gov/security/Search.asp. Locate the above website
and enter the name of your institution. Examine the criminal offenses, hate crimes, and arrests at your own
college. In the table on the next page, list the number of reported on-campus crimes, the number of arrests,
and the number of referrals for disciplinary action over recent years. Consider the costs from crime that you
personally face. How does the pattern of crime on your own campus compare to the trend in on-campus crime
throughout the United States?
ANSWERS TO STUDY QUESTIONS
SUGGESTED ANSWERS TO THE DISCUSSION QUESTIONS
1. According to Gary Becker’s model of criminal behavior, the two main factors that determine crime are the
risk and return of a job. The decision to do legal or illegal work is viewed as an investment-like decision.
2. Becker assumes that criminals are rational, and that they are capable of making rational decisions. This has
been criticized because many crimes are senseless and defy rational explanation.
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3. The risks associated with a crime are the risks of being caught and punished. The return for a crime is the
personal gain from the crime. Crime is a high-risk and high-return job opportunity. A legal job offers no risk
of arrest, but offers a low salary for unskilled labor. Thus, legal work is low-risk and a low-return job
opportunity.
4. A recession is expected to increase crime as it reduces the possibility of a legal job, which offers a good
salary. The high risk/ high return of crime is a more attractive alternative for some people.
5. Raising the level of education in the United States is expected to lower crime, as more people will be trained
to accept employment in the expanding high-tech economy. Over the last half-century, high-paying lowskilled job opportunities have diminished, while high-skilled jobs have grown. This trend is expected to
continue.
6. The two things that we can do to deter criminals from committing crime are:
(1) We can increase the risk of getting caught.
(2) We can increase the severity of the punishment.
7. The costs associated with a crime include the value of what was taken or stolen, the victim’s loss of actual or
potential income, the monetary value of psychological trauma, and the pain and suffering resulting from
injuries or death.
8. The optimal level of law enforcement is at the point where the marginal cost of apprehending, trying, and
convicting the criminal is equal to the marginal benefit to society from having this criminal incarcerated.
9. Because a criminal is expected to continue to commit crimes, the marginal benefit to society from
incarceration is the prevention of future crimes by this individual.
10. The marginal benefit of incarcerating a criminal is estimated to be $60,000 per year. The additional cost of
continuing to hold the criminal in jail is $27,000 per year. The net benefit to society from continuing to
incarcerate this criminal is $33,000 per year.
11. Economists use people’s willingness-to-pay to avoid crime ridden areas, and average jury awards to estimate
the intangible costs of crime.
SUGGESTED ANSWER TO THE WEB-BASED QUESTION
The latest data indicate that crime on campus has remained stable over last three years in most categories.
However, there is cause for concern because the data indicate a large escalation in liquor law violations.